Question

Topic: Customer Behavior

How To Order Pricing In Subscription Model?

Posted by van.goethem.vianney on 7/20/2020 at 9:17 AM ET 25 Points
Hey,

I have been thinking about how to order your pricing in a subscription model.These last couple of months i have been reading; " Influence The psychology of persuasion."

One of the models that the author adressess is reciprocity. He states that the compliance rate of the rejection- then- retreat technique is very significant.

As an example; if we ask on a campus if a student would be willing to go to the zoo with youth juvineles every week for a year 83% would say no. But if we back off after this question and ask them to at least go once, 50% would say yes. While if we would just ask them to go once, the compliance rate is only 25%. So, by asking a more and then backing off you get your compliance rate to increase with 100%.

This principle is caused by a combination of the reciprocity tendency and the contrast misreaction tendency.

Now to the marketing part; i am wondering, why are all subscription models priced like this; free - $ 100 - $ 1000 ( from cheap to expensive).

Wouldn't it make more sense to go from expensive to cheap ( $ 1000 - $100 - free). By doing so people will make a concession and take the second option.

Does anybody have any experience with this?
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RESPONSES

  • Posted by Jay Hamilton-Roth on 7/20/2020 at 11:46 AM Accepted
    The reciprocity model in the book is about a conversation. Start with a large demand, but with the goal of actually achieving a lessen demand. That works well when there's one offer in front of a person at a time and you understand what the person needs.

    When someone visits a website or reads your marketing materials, there's likely no one from your company there to influence. The person reading may not be a serious lead, but is simply curious. So, would you rather have a random person interact with your company regularly (for free) or walk away? One common goal is to use the sales funnel to move them from free to very-low cost, and up the chain. You give them a taste and hope they buy a box to take home. If you start with a large price at first, the random person would read no further.

    If you have a prequalified lead, then it would make sense to offer the $1000 option first.
  • Posted by Shelley Ryan on 8/12/2020 at 10:08 AM Moderator
    Hi Everyone,

    I am closing this question since there hasn't been much recent activity.

    Thanks for participating!

    Shelley
    MarketingProfs
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